Three finally takes Ofcom to court over 5G spectrum auction

Nick Summers

Three has followed through on its threat to take Ofcom to court. The mobile network operator, owned by Hutchison Whampoa, is unhappy with the planned rules for the next spectrum auction. It believes they're too gentle and will allow BT, EE and Vodafone to increase their dominance of UK airwaves, stifling competition in the process. "We confirm that we have filed a judicial review before the UK courts in relation to the competition measures that will apply in the upcoming spectrum auction," a Three spokesperson told Engadget. "It is absolutely vital that the regulator gets this auction right for the long-term benefit of all consumers."

At present, BT and EE own 42 percent of mobile spectrum. Vodafone is close behind with 29 percent, while Three and O2 have 15 and 14 percent, respectively. Ofcom has 190 MHz of spectrum to auction; 40 MHz in a 2.3 GHz band, which could be used by networks immediately to improve 4G services, and 150 MHz of spectrum in a 3.4 GHz band, which will be pivotal for 5G connectivity in the future. The regulator has proposed a 255 MHz cap on all "immediately useable" spectrum, which would disqualify BT and EE from the 2.3 GHz band auction. So far, so good for Three.

The second proposal is a 340 MHz cap across all mobile spectrum, which includes the 3.4 GHz band and a future 7000MHz band auction. That would limit any one operator from holding more than 37 percent of the UK's total spectrum. Three believes that's too high. Responding to Ofcom's announcement, Dave Dyson said: "By making decisions that increase the dominance of the largest operators, Ofcom is damaging competition, restricting choice and pushing prices up for the very consumers that it's mean to protect." He called Ofcom's proposals "a kick in the teeth" and suggested the mobile market was "imbalanced and failing customers."

Last month, Three hand-delivered a letter to Ofcom signalling its intent to mount a legal challenge. We don't know if Ofcom responded or not, but regardless Three wasn't content. So now it's following through with a court case that threatens to delay an already long overdue spectrum auction. Three says it should be a short legal process, however, with a decision by early 2018. The impact should be minimal, the company argues, because the case is concerned with the 3.4 GHz band specifically, which won't trickly down into consumer-facing 5G services for some time.

Three's gripes are somewhat justified — it wants to be competitive with EE and BT, but was blocked from merging with O2, which would have created a combined spectrum allocation on par with Vodafone. The company bought UK Broadband, which owns Relish and a smidge of 3.4 GHz spectrum, but that won't be enough to change its fourth-place position. Its only option is to outbid its opponents in the next auction — an outcome that seems unlikely, based on how feverishly it's launched this court case.